U.S. Treasury yields dropped on Thursday after President Donald Trump announced a 90-day tariff reprieve for most countries, easing investor fears and reversing a sharp bond market sell-off.
As of 4:50 a.m. ET, the yield on the 10-year Treasury note fell by over 10 basis points to 4.288%, while the 2-year yield declined to 3.841%. This came after Wednesday’s spike in yields, when the 10-year briefly surged past 4.51%, reflecting high volatility in the bond market.
Typically seen as a safe haven during market turmoil, U.S. Treasurys experienced an unusual sell-off earlier in the week. Analysts attributed this to investor concerns over trade policy unpredictability and the broader impact of rising tariffs.
President Trump’s move to implement a temporary 10% universal tariff on most countries brought some relief, though China was excluded from the pause and saw its tariff rate rise sharply to 125% amid ongoing trade tensions.
Trump admitted to watching the bond market closely, saying, “The bond market is very tricky… but right now it’s beautiful.” This statement followed investor unease and a sudden spike in yields just a day earlier.
Market analysts view the tariff pause as a short-term calming signal but remain wary of longer-term trade policy shifts. “A 10% minimum universal tariff represents the largest increase in decades,” noted analysts at Deutsche Bank, adding that ongoing uncertainty is likely to keep markets on edge.
Adding to market stabilization was strong demand during Wednesday’s 10-year Treasury auction, further signaling that investor appetite for bonds remains intact despite recent turbulence.
Looking ahead, investors await key economic indicators. The Consumer Price Index (CPI) for March is set to be released at 8:30 a.m. ET, followed by weekly jobless claims and the Producer Price Index (PPI) on Friday — all of which will provide more clarity on the health of the U.S. economy.
